– The FLSA guarantees overtime pay to covered employees working over 40 hours a week.
– An employee is exempt from overtime pay if they work in a bona fide executive, administrative, or professional capacity and are paid on a salary basis.
– The Supreme Court recently ruled that a high earning employee paid solely on a daily rate is entitled to overtime pay.
– The FLSA also provides exemptions based on salary level, duties, and income. – An employee making $100,000 or more on a salary basis and regularly performing executive duties is considered an executive.
– If an employee is regularly paid on a weekly or less frequent basis a predetermined amount not subject to reduction based on the work performed, they are considered to be paid on a salary basis.
– If an employee’s compensation is computed on an hourly, daily, or shift basis but the employer guarantees the employee at least $684 a week regardless of the hours worked, they are considered to be paid on a salary basis.
– A worker paid by the day or hour, docked for time off, and uncompensated for time not needed is generally understood as a daily or hourly wage earner, not a salaried employee.
– The Supreme Court ruled that a highly compensated employee paid on a daily rate basis was entitled to overtime. – Michael Hewitt worked for Helix Energy Solutions Group from 2014 to 2017 as a tool pusher on an offshore oil rig.
– Hewitt worked 12 hours a day, seven days a week (84 hours a week) for 28 days and then had 28 days off before reporting back.
– Hewitt sued Helix under the FLSA to recover overtime pay and the Supreme Court agreed that he was not exempt from overtime. – Weekly-rate workers must receive their full salary for the week, even if they did not work the full week.
– Daily-rate workers are paid based on the number of days they worked, not on a weekly basis.
– Hourly-rate and shift workers can be considered salaried if their employer guarantees a weekly payment approximating what they usually earn. 1. The Court rejected Helix’s public policy arguments for departure from salary basis test rules.
2. Helix’s arguments about windfalls for high earners, industry operation disruption, and retroactive liability were dismissed by the Court.
3. The Court noted that even strong policy arguments cannot override clear textual directives.
4. Helix’s objections about industry operation and cost base were also rejected by the Court.
5. The Court stated that Helix cannot avoid paying employees a true salary and still avoid paying overtime, even for highly compensated employees.
6. The Supreme Court’s recent opinion means that employers should review how their employees are paid to ensure they are not operating under false assumptions about overtime exemptions for highly compensated employees.
https://www.rumberger.com/insights/employers-beware-highly-compensated-employees-could-be-entitled-to-overtime/
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